Simple UO + ADX Futures Strategy

📚 Trading Plan with UO + ADX + 9/21 MA
1. Indicator Roles

Ultimate Oscillator (UO): Measures momentum across 3 different timeframes (short, medium, long). I use the lengths 4/8/14.

Overbought: > 70

Oversold: < 30

Neutral: 30–70 range

ADX (14-period, 100 smoothed): Measures trend strength, not direction.

Weak trend: < 17~20

Building trend: 20–25

Strong trend: > 27–30, enter on pullback. A bounce from the 9 or 21 MA.

2. Core Trading Logic

We combine momentum (UO) with trend strength (ADX) to avoid false signals.

Long Setup (Buy):

ADX rising above 23 → trend gaining strength.

UO crosses above 30 from below → confirms bullish momentum.

Confirm price is above 21-day MA (optional filter for trend).

📈 Exit:

UO > 50 and turning down, or

ADX below 17, or

Trailing MA.

Short Setup (Sell):

ADX rising above 27 → trend gaining strength.

UO crosses below 70 from above → confirms bearish momentum.

Confirm price is below 9-day MA (optional filter for trend).

📉 Exit:

UO < 30 and turning up, or

ADX drops below 20, or

Trailing stop.

3. Advanced Filters

Avoid false breakouts: If ADX < 20, ignore UO signals (no strong trend).

Divergence filter: If price makes a new high but UO does not → weakening trend.

Scaling:

Add to winners if ADX > 30 and still rising.

Take partial profits if ADX flattens while UO is in extreme zone.

4. Risk Management

Position sizing: Risk 1–2% of account per trade.

Stop loss: Below recent swing low (for longs) or above swing high (for shorts).

Take profit: Risk:Reward 1:2 minimum, or trail with MA.

5. Example Workflow

Case 1 (Bullish):

ADX rises from 18 → 27 (trend forming).

UO crosses 50 → bullish signal.

Enter long.

Exit when UO > 70 and rolls over, or ADX drops < 20.

Case 2 (Bearish):

ADX rises above 25.

UO crosses below 50.

Enter short.

Exit when UO < 30 and turns up, or ADX weakens.

✅ Summary Ruleset

Trade only when ADX > 23–25 (filter out noise).

Go long: UO crosses > 50 with rising ADX.

Go short: UO crosses < 50 with rising ADX.

Exit on momentum extremes (UO < 30 or > 70) or weakening ADX.

Risk: Keep losses capped at 1–2% of equity per trade.